Who’s Afraid Of Recession?

Who’s Afraid Of Recession?

Who’s Afraid Of Recession? – Why A Recession In The US Is Coming Closer & How To Be On The Right Side Of The Trade by Ronald-Peter Stoeferle & Mark J. Valek – Incrementum

Our Conviction

Financial markets have become highly dependent on central bank policies. Grasping the consequences of the interplay between monetary inflation and deflation is crucial for prudent investors.

Due to structural over-indebtedness and the resulting addiction to low/negative real interest rates, we are certain that the traditional way of thinking about financial markets and asset management has lost relevance for investors.

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Therefore, at Incrementum we evaluate all our investments not only from the perspective of the global economy but also in the context of the current state of the global monetary regime. This analysis produces what we consider a truly holistic view of the state of financial markets.

We sincerely believe that the Austrian School of Economics provides us with the appropriate intellectual foundation, especially in this demanding financial and economic environment.

Ronald-Peter Stoeferle, Mark J. Valek

Who’s Afraid Of Recession? – Introduction

In 2015 We Warned On Several Occasions…


Markets Are Now Starting To Price In Our “Scenario I” That We Outlined In Our Last “In Gold We Trust Report” (June 2015)


Why Were We Cautious Already Back Then? The Austrian Perspective Leads To A Different Understanding Of The Economy…


…And Teaches Us That Artificial Credit Expansions Distort The Capital Structure, Which Eventually Has To Correct…


  • If real interest rates are distorted, market participants receive misleading price signals and invest too much into capital goods (e.g. oil exploration) relative to consumer goods
  • A reallocation of capital (i.e. bankruptcies, liquidation of debt) becomes inevitable, which usually coincides with a recession
  • This phenomenon is primarily explainable by an unsustainable credit-induced boom

Neither Have They Warned About Calamities In The Past…

“…given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.” – Ben Bernanke, May 17, 2007

“The Federal Reserve is not currently forecasting a recession.“ – Ben Bernanke, Jan. 10, 2008

See full slides below.

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